Please prepare balance sheet

I. Using Excel, prepare comparative financial statements (Balance Sheet and Income Statement) for the two most recent years (2022 & 2021). Round amounts to the nearest one-tenth of a percent. This section is worth 7 points.

II. Using Excel, prepare common-size statements (Balance Sheet and Income Statement) for the two most recent years (2022 & 2021). This section is worth 7 points.

III. Using Word, discuss the findings of the comparative and common-size statements.  What changes seem relevant or significant? How is the company doing?  What do you think the comparative and common-size statements are telling you?  Is the company doing better or worse? Explain, in detail, your analysis. This section is worth 6 points.

FISCAL YEAR 2022 ANNUAL FINANCIAL REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 1, 2022
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File Number 001-38842
Delaware
State or Other Jurisdiction of
Incorporation or Organization
83-0940635
I.R.S. Employer Identification
500 South Buena Vista Street
Burbank, California 91521
Address of Principal Executive Offices and Zip Code
(818) 560-1000
Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value
Trading Symbol(s)
DIS
Name of each exchange on which registered
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
The aggregate market value of common stock held by non-affiliates (based on the closing price on the last business day of the registrant’s most
recently completed second fiscal quarter as reported on the New York Stock Exchange-Composite Transactions) was $249.5 billion. All executive
officers and directors of the registrant and all persons filing a Schedule 13D with the Securities and Exchange Commission in respect to registrant’s
common stock have been deemed, solely for the purpose of the foregoing calculation, to be “affiliates” of the registrant.
There were 1,823,591,988 shares of common stock outstanding as of November 16, 2022.
Documents Incorporated by Reference
Certain information required for Part III of this report is incorporated herein by reference to the proxy statement for the 2023 annual meeting of
the Company’s shareholders.
THE WALT DISNEY COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I
ITEM 1.
Business
2
ITEM 1A.
Risk Factors
19
ITEM 1B.
Unresolved Staff Comments
28
ITEM 2.
Properties
28
ITEM 3.
Legal Proceedings
28
ITEM 4.
Mine Safety Disclosures
29
29
Information About our Executive Officers
PART II
ITEM 5.
Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
30
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
31
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
53
ITEM 8.
Financial Statements and Supplementary Data
54
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
54
ITEM 9A.
Controls and Procedures
54
ITEM 9B.
Other Information
55
ITEM 9C
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
55
PART III
ITEM 10.
Directors, Executive Officers and Corporate Governance
56
ITEM 11.
Executive Compensation
56
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
56
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
56
ITEM 14.
Principal Accounting Fees and Services
56
PART IV
ITEM 15.
Exhibits and Financial Statement Schedules
57
ITEM 16.
Form 10-K Summary
61
SIGNATURES
62
Consolidated Financial Information — The Walt Disney Company
63
Cautionary Note on Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements generally relate to future events or our future financial or operating performance and may include statements
concerning, among other things, financial results, business plans (including statements regarding new services and products and
future expenditures, costs and investments), future liabilities, impairments and amortization, competition, and the impact of
COVID-19 on our businesses and results of operations. In some cases, you can identify forward-looking statements because
they contain words such as “may,” “will,” “would,” “should,” “expects,” “plans,” “could,” “intends,” “target,” “projects,”
“believes,” “estimates,” “anticipates,” “potential” or “continue” or the negative of these words or other similar terms or
expressions that concern our expectations, strategy, plans or intentions. These statements reflect our current views with respect
to future events and are based on assumptions as of the date of this report. These statements are subject to known and unknown
risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different
from expectations or results projected or implied by forward-looking statements.
Such differences may result from actions taken by the Company, including restructuring or strategic initiatives (including
capital investments, asset acquisitions or dispositions, new or expanded business lines or cessation of certain operations), our
execution of our business plans (including the content we create and IP we invest in, our pricing decisions and our cost
structure) or other business decisions, as well as from developments beyond the Company’s control, including:
•
•
•
•
•
•
•
•
•
further deterioration in domestic and global economic conditions;
deterioration in or pressures from competitive conditions, including competition to create or acquire content;
consumer preferences and acceptance of our content, offerings, pricing model and price increases and the market for
advertising sales on our direct-to-consumer services and linear networks;
health concerns and their impact on our businesses and productions;
international, regulatory, legal, political, or military developments;
technological developments;
labor markets and activities;
adverse weather conditions or natural disasters; and
availability of content;
each such risk includes the current and future impacts of, and is amplified by, COVID-19 and related mitigation efforts.
Such developments may further affect entertainment, travel and leisure businesses generally and may, among other things,
affect (or further affect, as applicable):
•
•
•
•
•
•
•
our operations, business plans or profitability;
demand for our products and services;
the performance of the Company’s content;
our ability to create or obtain desirable content at or under the value we assign the content;
the advertising market for programming;
income tax expense; and
performance of some or all Company businesses either directly or through their impact on those who distribute our
products.
Additional factors include those described in this Annual Report on Form 10-K, including under the captions “Risk
Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” in our
subsequent quarterly reports on Form 10-Q, including under the captions “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” and in our subsequent filings with the Securities and Exchange
Commission.
A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances. You should not
place undue reliance on the forward-looking statements. Unless required by federal securities laws, we assume no obligation to
update any of these forward-looking statements, or to update the reasons actual results could differ materially from those
anticipated, to reflect circumstances or events that occur after the statements are made.
1
PART I
ITEM 1. Business
The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with
operations in two segments: Disney Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and
Products (DPEP).
The terms “Company”, “we”, “our” and “us” are used in this report to refer collectively to the parent company and the
subsidiaries through which businesses are conducted.
COVID-19 Pandemic
Since early 2020, the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) and its
variants. COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at
DPEP where our theme parks and resorts were closed and cruise ship sailings and guided tours were suspended. In addition, at
DMED we delayed, or in some cases, shortened or cancelled theatrical releases and experienced disruptions in the production
and availability of content. Operations have resumed at various points since May 2020, with certain theme park and resort
operations and film and television productions resuming by the end of fiscal 2020 and throughout fiscal 2021. Although
operations resumed, many of our businesses continue to experience impacts from COVID-19, such as incremental health and
safety measures and related increased expenses, capacity restrictions and closures (including at some of our international parks
and in theaters in certain markets), and disruption of content production activities.
The impact of COVID-19 related disruptions on our financial and operating results will be dictated by the currently
unknowable duration and severity of COVID-19 and its variants, and among other things, governmental actions imposed in
response to COVID-19 and individuals’ and companies’ risk tolerance regarding health matters going forward. We have
incurred and will continue to incur additional costs to address government regulations and the safety of our employees, guests
and talent.
Human Capital
The Company’s key human capital management objectives are to attract, retain and develop the highest quality talent. To
support these objectives, the Company’s human resources programs are designed to develop talent to prepare them for critical
roles and leadership positions for the future; reward and support employees through competitive pay, benefit, and perquisite
programs; enhance the Company’s culture through efforts aimed at making the workplace more engaging and inclusive; acquire
talent and facilitate internal talent mobility to create a high-performing, diverse workforce; engage employees as brand
ambassadors of the Company’s content, products and experiences; and evolve and invest in technology, tools, and resources to
enable employees at work.
The Company employed approximately 220,000 people as of October 1, 2022, of which approximately 166,000 were
employed in the U.S. and approximately 54,000 were employed internationally. Our global workforce is comprised of
approximately 78% full time and 15% part time employees, with another 7% being seasonal employees. A significant number
of employees in various parts of our businesses, including employees of our theme parks, and writers, directors, actors and
production personnel for our productions are covered by collective bargaining agreements. In addition, some of our employees
outside the U.S. are represented by works councils, trade unions or other employee associations.
Some of our key programs and initiatives to attract, develop and retain our diverse workforce include:
• Diversity, Equity, and Inclusion (DE&I): Our DE&I objectives are to build teams that reflect the life experiences of
our audiences, while employing and supporting a diverse array of voices in our creative and production teams. Our
DE&I initiatives and programs include:
◦ The Company’s Reimagine Tomorrow efforts, which build on Disney’s longstanding commitment to diversity,
equity and inclusion, and features a website, Disney’s first large-scale platform for amplifying underrepresented
voices
◦ Executive Incubator, Creative Talent Development and Inclusion, and the Disney Launchpad: Shorts Incubator,
which are designed to create a pipeline of next-generation creative executives from underrepresented backgrounds
◦ Development programs, which target underrepresented talent
◦ Innovative learning opportunities, which spark dialogue among employees, leaders, Disney talent and external
experts
◦ Over 100 employee-led Business Employee Resource Groups (BERGs), which represent and support the diverse
communities that make up our workforce
◦ The Disney Look appearance guidelines, which were updated to cultivate a more inclusive environment that
encourages and celebrates authentic expressions of belonging among employees
2
•
Health, wellness, family resources, and other benefits: Disney’s benefit offerings are designed to meet the varied
and evolving needs of a diverse workforce across businesses and geographies while helping our employees care for
themselves and their families. We provide:
◦ Healthcare options aimed at improving quality of care while limiting out-of-pocket costs
◦ Family care resources, such as childcare programs for employees, including access to onsite/community centers,
enhanced back-up care choices to include personal caregivers, childcare referral assistance and center discounts,
homework help, a variety of parenting educational resources and a family building benefit supporting fertility
treatments, adoptions or surrogacy
◦ Free mental and behavioral health resources, including on-demand access to the Employee Assistance Program for
employees and their dependents
◦ Two Centers for Living Well that offer convenient, on-demand access to board-certified physicians and counselors
◦ A multi-layered response to COVID-19, including testing and treatment under all Company medical plans at no
cost to employees and dependents
◦ Global Well-Being Week (introduced in 2022), a dedicated week for employees around the world to celebrate,
learn and engage in well-being through in-person and virtual events and activities focused on physical, emotional,
financial, and social well-being
•
Disney Aspire: We support the long-term career aspirations of our hourly employees and further our commitment to
strengthening the communities in which we work through our education investment program, Disney Aspire. We pay
100% of the tuition costs upfront for participating employees at a variety of in-network learning providers and
universities and reimburse employees for applicable books and fees. The program helps our employees achieve their
goals professionally – whether at Disney or beyond – by equipping them with the skills they need to succeed in the
rapidly changing 21st century career landscape. More than 16,000 current employees have enrolled in or graduated
from a Disney Aspire program, and more than two-thirds of our program graduates have earned an Associate,
Bachelor’s or Master’s degree.
Talent Development: We prioritize and invest in creating opportunities to help employees grow and build their
careers through a multitude of training and development programs. These include online, instructor-led and on-the-job
learning formats as well as executive talent and succession planning paired with an individualized development
approach.
•
•
Social Responsibility and Community: The Company’s longstanding commitment to Corporate Social
Responsibility (CSR) helps differentiate the Company as an employer. In 2021, we refreshed our CSR strategy to
connect it more closely with the Company’s mission and commercial offerings and environmental and social
opportunities relevant to our business and employees. Our CSR priorities include diversity, equity, and inclusion;
environmental stewardship and conservation; giving back to our communities with a special focus on supporting
children and families; human capital management; and operating responsibly. The strategy provides a path to
embedding these CSR priorities into our offerings and operations in addition to our philanthropy. The Company also
supports employees who give back to our communities with a generous matching gifts program and a unique
employee volunteering program, Disney VoluntEARS, which rewards volunteer hours with the opportunity to direct
not-for-profit donations by the Company.
Environmental and Sustainability
The Company has developed measurable environmental and sustainability goals for 2030, grounded in science and an
assessment of where the Company’s operations have the most significant impact on the environment, as well as the areas where
it can most effectively mitigate that impact. These goals include, among others, achieving net zero Scope 1 and 2 greenhouse
gas emissions for our direct operations, and zero waste to landfill at our wholly owned and operated parks and resorts by 2030.
DISNEY MEDIA AND ENTERTAINMENT DISTRIBUTION
DMED encompasses the Company’s global film and episodic television content production and distribution activities.
Content is distributed by a single organization across three significant lines of business: Linear Networks, Direct-to-Consumer
and Content Sales/Licensing. Content is generally created/licensed by four groups: Studios, General Entertainment, Sports and
International. The distribution organization has full accountability for the financial results of the entire media and entertainment
business.
3
The operations of DMED’s significant lines of business are as follows:
• Linear Networks
◦ Domestic Channels: ABC Television Network (ABC) and eight owned ABC television stations (Broadcasting), and
Disney, ESPN, Freeform, FX and National Geographic branded domestic television networks (Cable)
◦ International Channels: Disney, ESPN, Fox, National Geographic and Star branded television networks outside of
the U.S.
◦ A 50% equity investment in A+E Television Networks (A+E), which operates a variety of cable channels including
A&E, HISTORY and Lifetime
• Direct-to-Consumer
◦ Disney+, Disney+ Hotstar, ESPN+, Hulu and Star+ direct-to-consumer (DTC) video streaming services
• Content Sales/Licensing
◦ Sale/licensing of film and television content to third-party television and subscription/advertising video-on-demand
(TV/SVOD) services
◦ Theatrical distribution
◦ Home entertainment distribution (DVD, Blu-ray discs and electronic home video licenses)
◦ Music distribution
◦ Staging and licensing of live entertainment events on Broadway and around the world (Stage Plays)
DMED also includes the following activities that are reported with Content Sales/Licensing:
• Post-production services by Industrial Light & Magic and Skywalker Sound
• National Geographic magazine and online business
• A 30% ownership interest in Tata Play Limited (formerly Tata Sky Limited), which operates a direct-to-home satellite
distribution platform in India
The significant revenues of DMED are as follows:
• Affiliate fees – Fees charged by our Linear Networks to multi-channel video programming distributors (i.e. cable,
satellite, telecommunications and digital over-the-top (e.g. YouTube TV) service providers) (MVPDs) and television
stations affiliated with ABC for the right to deliver our programming to their customers
• Subscription fees – Fees charged to customers/subscribers for our DTC streaming services
• Advertising – Sales of advertising time/space at Linear Networks and Direct-to-Consumer
• TV/SVOD distribution – Licensing fees and other revenue for the right to use our film and television productions and
revenue from fees charged to customers to view our sports programming (“pay-per-view”) and fees for streaming
access to films that are also playing in theaters (“Premier Access”). TV/SVOD distribution revenue is primarily
reported in Content Sales/Licensing, except for pay-per-view and Premier Access revenues, which are reported in
Direct-to-Consumer.
• Theatrical distribution – Rentals from licensing our film productions to theaters
• Home entertainment – Sales of our film and television content to retailers and distributors in home video formats
• Other content sales/licensing revenue – Revenues from licensing our music, ticket sales from stage play performances
and fees from licensing our intellectual properties (“IP”) for use in stage plays
• Other revenue – Fees from sub-licensing of sports programming rights (reported in Linear Networks) and sales of postproduction services (reported with Content Sales/Licensing)
The significant expenses of DMED are as follows:
• Operating expenses consist primarily of programming and production costs, technical support costs, operating labor,
distribution costs and costs of sales. Programming and production costs include amortization of licensed programming
rights (including sports rights), amortization of capitalized production costs, subscriber-based fees for programming
our Hulu services, production costs related to live programming such as news and sports and amortization of
participations and residual obligations. Programming and production costs also include fees paid to Linear Networks
from other DMED businesses for the right to air our linear networks and related services. These costs are largely
incurred across four content creation/licensing groups, as follows:
◦ Studios – Primarily capitalized production costs related to films produced under the Walt Disney Pictures,
Twentieth Century Studios, Marvel, Lucasfilm, Pixar and Searchlight Pictures banners
4
◦ General Entertainment – Primarily internal production of and acquisition of rights to episodic television programs
and news content. Internal content is generally produced by the following television studios: ABC Signature; 20th
Television; Disney Television Animation; FX Productions; and various studios for which we commission
productions for our branded channels and DTC streaming services
◦ Sports – Primarily acquisition of professional and college sports programming rights and related production costs
◦ International – Primarily internal production of and acquisition of rights to local content outside the U.S. and
Canada
• Selling, general and administrative costs, including marketing costs
• Depreciation and amortization
Media and Entertainment Distribution Strategy
The Company has significantly increased its focus on distribution of content via our own DTC streaming services relative
to traditional distribution of content. In general, film content was traditionally distributed first in the theatrical market, followed
by the home entertainment market and then in the TV/SVOD market. In general, episodic television content was traditionally
launched on our domestic linear networks and licensed for use globally in other TV/SVOD windows. Although the Company
continues to monetize a significant amount of its content in the traditional manner, our focus on our own DTC distribution has
had a number of impacts including but not limited to:
• in some cases, we are producing exclusive content for our DTC streaming services;
• rather than selling our content in the TV/SVOD market, we generally distribute it on our DTC streaming services; and
• in part because of the impact of COVID-19 on theatrical markets around the world, we may alter our traditional
theatrical distribution approach, for example by making a film available on our DTC streaming services at the same
time it is in theaters or shortly thereafter (e.g. Premier Access).
Over time, all else being equal, these impacts will tend to increase revenue and costs at Direct-to-Consumer and reduce
revenue and costs at Content Sales/Licensing and Linear Networks. Our distribution approach is based on flexibility in our
windowing strategy, and we may change our original launch and distribution strategy for any particular piece of content.
Distribution decisions may impact revenues and viewership, and the allocation of costs to our businesses/distribution platforms,
particularly programming, production and marketing costs, depends on the distribution approach.
A more detailed discussion of our distribution businesses and production groups follows.
Linear Networks
The majority of Linear Networks revenue is derived from affiliate fees and advertising sales. The Company’s linear
networks businesses provide programming under multi-year licensing agreements with MVPDs and/or affiliated television
stations that are generally based on contractually specified rates on a per subscriber basis. The amounts that we can charge to
MVPDs for our networks is largely dependent on the quality and quantity of programming that we can provide and the
competitive market for programming services. The ability to sell advertising time and the rates received are primarily dependent
on the size and nature of the audience that the network can deliver to the advertiser as well as overall advertiser demand.
Linear Networks consist of our domestic and international branded television channels.
Domestic Channels
Our domestic channels include Cable operations comprising Disney, ESPN, Freeform, FX and National Geographic
branded channels and Broadcasting operations comprising ABC and eight owned ABC affiliated television stations.
Cable
Disney Channels
Branded television channels include: Disney Channel; Disney Junior; and Disney XD (collectively Disney Channels).
Disney Channel – the Disney Channel airs original series and movie programming 24 hours a day targeted to kids ages 2
to 14. The channel features live-action comedy series, animated programming and preschool series as well as original movies
and theatrical films.
Disney Junior – the Disney Junior channel airs programming 24 hours a day targeted to kids ages 2 to 7 and their parents
and caregivers. The channel features animated and live-action programming that blends Disney’s storytelling and characters
with learning. Disney Junior also airs as a programming block on the Disney Channel.
Disney XD – the Disney XD channel airs programming 24 hours a day targeted to kids ages 6 to 11. The channel features a
mix of live-action and animated programming.
5
ESPN
Branded television channels include eight 24-hour domestic television sports channels: ESPN and ESPN2 (both of which
are dedicated to professional and college sports as well as sports news and original programming); ESPNU (which is dedicated
to college sports); ESPNEWS (which re-airs select ESPN studio shows and airs a variety of other programming); SEC Network
(which is dedicated to Southeastern Conference college athletics); Longhorn Network (which is dedicated to The University of
Texas athletics); ESPN Deportes (which airs professional and college sports as well as studio shows in Spanish); and ACC
Network (which is dedicated to Atlantic Coast Conference college athletics). In addition, ESPN programs the sports schedule
on ABC, which is branded ESPN on ABC.
ESPN also includes the following:
• ESPN.com, which delivers sports news, information and video on internet-connected devices, with approximately 20
editions in five languages globally. In the U.S., ESPN.com also features live video streams of ESPN channels to
authenticated MVPD subscribers. Non-subscribers have limited access to certain content.
• ESPN app, which is an all-in-one sports content platform, serving fans with a personalized digital destination on
streaming devices. The app content includes news, highlights and real-time interactive features, including real-time
scores, play-by-play and fantasy sports scores. ESPN+ subscribers can access the ESPN+ content from the app. In the
U.S., the app also features live video streams of ESPN’s linear channels and exclusive events to authenticated MVPD
subscribers. Non-subscribers have limited access to certain content.
• ESPN Radio, which is the largest sports radio network in the U.S. In fiscal 2022, the Company sold its four owned
radio stations for an amount that was not material.
In addition, ESPN owns and operates the following events: ESPYs (annual awards show); X Games (winter and summer
action sports competitions), which were sold in October 2022 for an amount that was not material; and a portfolio of collegiate
sporting events including: football bowl games, basketball games, softball games and post-season award shows.
ESPN is owned 80% by the Company and 20% by Hearst Corporation (Hearst).
Freeform
Freeform is a channel targeted to viewers ages 18 to 34 that airs original, Company owned (“library”) and licensed
television series, films and holiday programming events.
FX Channels
Branded general entertainment television channels include: FX; FXM; and FXX (collectively FX Channels), which air a
mix of original, library and licensed television series and films.
National Geographic Channels
Branded television channels include: National Geographic; Nat Geo Wild; and Nat Geo Mundo (collectively National
Geographic Channels). National Geographic Channels air scripted and documentary programming on such topics as natural
history, adventure, science, exploration and culture.
National Geographic, including the magazine and online business reported in Content Sales/Licensing, is owned 73% by
the Company and 27% by the National Geographic Society.
6
The number of subscribers (in millions) for the Company’s significant domestic cable channels are as follows:
Subscribers(1)
Disney
Disney Channel
Disney Junior
Disney XD
ESPN
ESPN
ESPN2
ESPNU
ESPNEWS(2)
SEC Network(2)
ACC Network(2)
Freeform
FX Channels
FX
FXX
FXM
National Geographic Channels
National Geographic
National Geographic Wild
74
54
53
74
74
51
56
51
50
73
74
71
46
73
46
(1)
Based on Nielsen Media Research estimates as of September 2022 (except where noted). Estimates include traditional
MVPD and the majority of digital OTT subscriber counts.
(2)
Because Nielsen Media Research does not measure this channel, estimated subscribers are according to SNL Kagan as
of December 2021.
Broadcasting
ABC
As of October 1, 2022, ABC had affiliation agreements with approximately 240 local television stations reaching almost
100% of U.S. television households. ABC broadcasts programs in the primetime, daytime, late night, news and sports
“dayparts”. ABC is also available digitally through the ABC App and website to authenticated MVPD subscribers. Nonsubscribers have more limited access to on-demand episodes.
ABC also produces a variety of primetime specials, news and daytime programming.
Domestic Television Stations
The Company owns eight television stations, six of which are located in the top ten television household markets in the
U.S. All of our television stations are affiliated with ABC and collectively reach approximately 20% of the nation’s television
households.
7
The stations we own are as follows:
TV Station
WABC
KABC
WLS
WPVI
KGO
KTRK
WTVD
KFSN
(1)
Market
New York, NY
Los Angeles, CA
Chicago, IL
Philadelphia, PA
San Francisco, CA
Houston, TX
Raleigh-Durham, NC
Fresno, CA
Television Market
Ranking(1)
1
2
3
4
8
9
24
55
Based on Nielsen Media Research, U.S. Television Household Estimates, January 1, 2022
International Channels
Our International Channels focus on General Entertainment, Sports and/or Family programming and operate under four
significant brands: Disney; ESPN; Fox; and Star. Our international channels use content from the Company’s various studios,
including library titles, as well as content acquired from third parties.
The Company’s increased focus on DTC distribution in international markets is expected to negatively impact the
International Channels business as we shift the primary means of monetizing our content from licensing of linear channels to
distribution on our DTC platforms.
General Entertainment
The Company operates approximately 220 General Entertainment channels outside the U.S. primarily under the Fox,
National Geographic and Star brands, which are broadcast in approximately 40 languages and 180 countries/territories.
Fox branded channels air a variety of scripted, reality and documentary programming. Channels are often thematically
branded, focusing on such topics as comedy, cooking, crime and movies, and are broadcast in most regions internationally.
National Geographic branded channels air scripted and documentary programming on such topics as natural history,
science, exploration and culture, and are broadcast in most regions internationally.
Star branded channels air a variety of scripted, reality and documentary programming primarily in India. Channels are
also broadcast in other countries in Asia Pacific and Latin America.
In addition, the Company operates UTV and Bindass branded channels principally in India. UTV Action and UTV
Movies offer Bollywood movies as well as Hollywood, Asian and Indian regional movies dubbed in Hindi. Bindass is a youth
entertainment channel.
Sports
The Company operates approximately 55 Sports channels outside the U.S. under the ESPN, Fox and Star brands, which
are broadcast in approximately 10 languages and 105 countries/territories.
ESPN branded channels primarily operate in Latin America, Asia Pacific and Europe. In the Netherlands, the ESPN
branded channels are operated by Eredivisie Media & Marketing CV (EMM), which has the media and sponsorship rights of
the Dutch Premier League for soccer. The Company owns 51% of EMM.
Fox branded sports channels primarily operate in Latin America, Asia Pacific and Europe. Fox Sports Premium, a pay
television service in Argentina, airs the matches of the professional soccer league in Argentina.
Star branded sports channels primarily operate in India and certain other countries in Asia Pacific. Star has rights to
various sports programming including cricket, soccer, tennis and field hockey.
Family
The Company operates approximately 75 Family channels outside the U.S. primarily under the Disney brand, which are
broadcast in approximately 25 languages and 175 countries/territories.
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As of September 2022, the estimated number of subscribers (in millions) for the Company’s significant international
channels, based on internal management reports, are as follows:
Subscribers
Disney
Disney Channel
Disney Junior
ESPN(1)
Fox(1)
National Geographic(1)
Star
General Entertainment(1)
Sports(1)
(1)
151
141
62
139
289
180
83
Reflects our estimate of each unique subscriber that has access to one or more of these branded channels.
Equity Investments
The Company has investments in media businesses that are accounted for under the equity method, the most significant of
which are A+E and CTV Specialty Television, Inc. (CTV). The Company’s share of the financial results for these investments
is reported as “Equity in the income (loss) of investees, net” in the Company’s Consolidated Statements of Operations.
A+E
A+E is owned 50% by the Company and 50% by Hearst. A+E operates a variety of cable channels:
• A&E – which offers entertainment programming including original reality and scripted series
• HISTORY – which offers original series and event-driven specials
• Lifetime and Lifetime Movie Network (LMN) – which offer female-focused programming
• FYI – which offers contemporary lifestyle programming
A+E programming is available in approximately 200 countries and territories. A+E’s networks are distributed
internationally under multi-year licensing agreements with MVPDs. A+E programming is also sold to international television
broadcasters and SVOD services.
As of September 2022, the number of domestic subscribers (in millions) for A+E channels are as follows:
Subscribers(1)
69
70
69
52
42
A&E
HISTORY
Lifetime
LMN
FYI
(1)
Based on Nielsen Media Research estimates as of September 2022. Estimates include traditional MVPD and the
majority of digital OTT subscriber counts.
CTV
ESPN holds a 30% equity interest in CTV, which owns television channels in Canada, including The Sports Networks
(TSN) 1-5, Le Réseau des Sports (RDS), RDS2, RDS Info, ESPN Classic Canada, Discovery Canada and Animal Planet
Canada.
Direct-to-Consumer
Our DTC businesses are subscription services that provide video streaming of general entertainment, family and sports
programming (services are offered individually or in various bundles) that are offered to customers directly or through thirdparty distributors on mobile and internet connected devices.
Disney+ Services (includes Disney+ Hotstar and Star+)
Disney+ is a subscription-based DTC service with Disney, Pixar, Marvel, Star Wars and National Geographic branded
programming, which are all top level selections or “tiles” within the Disney+ interface. Outside the U.S. and Latin America,
Disney+ also includes a Star branded tile, which features general entertainment programming.
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Disney+ Hotstar is a subscription-based DTC service available in India, Indonesia, Malaysia and Thailand. Programming
includes television shows, movies, sports and original series in approximately ten languages, in addition to gaming and social
features. Disney+ Hotstar has exclusive streaming rights to cricket from the International Cricket Council (ICC) and the Board
of Control for Cricket in India (BCCI), along with other cricket rights.
Star+ is a standalone DTC service in Latin America with a variety of general entertainment content and live sports
programming.
Disney+ services use content from the Company’s various studios, including library titles, as well as content acquired
from third parties.
The majority of Disney+ revenue is derived from subscription fees. In addition, Disney+ Hotstar generates advertising
revenue and Disney+ generates Premier Access fees. The Company plans to introduce an ad-supported Disney+ service in the
U.S. in December 2022 and internationally starting in late 2023.
As of October 1, 2022, the estimated number of paid Disney+, Disney+ Hotstar and Star+ subscribers, based on internal
management reports, was approximately 164 million.
ESPN+
ESPN+ is a subscription-based DTC service offering thousands of live sporting events, on-demand sports content and
original programming. ESPN+ revenue is derived from subscription fees, pay-per-view fees and, to a lesser extent, advertising
sales. Live events available through the service include mixed martial arts, soccer, hockey, boxing, baseball, college sports,
golf, tennis and cricket. ESPN+ is currently the exclusive distributor for Ultimate Fighting Championship (UFC) pay-per-view
events in the U.S. As of October 1, 2022, the estimated number of paid ESPN+ subscribers, based on internal management
reports, was approximately 24 million.
Hearst has a 20% interest in the Company’s DTC sports business.
Hulu
Hulu is a subscription-based DTC service with general entertainment content from the Company’s various studios as well
as content licensed from third parties. Hulu’s revenue is primarily derived from subscription fees and advertising sales. Hulu
offers SVOD services with or without advertising in addition to a digital OTT MVPD (Live TV) service that is available with
either of Hulu’s SVOD services and, since December 2021, includes the Disney+ and ESPN+ DTC services. Hulu’s Live TV
service includes live linear streams of cable networks and the major broadcast networks. In addition, Hulu offers subscriptions
to premium services such as HBOMax, Cinemax, Starz and Showtime, which can be added to the Hulu service. Certain
programming from ABC, Freeform and FX Channels is also available on the Hulu SVOD service one day after airing on these
channels. As of October 1, 2022, the estimated number of paid Hulu subscribers, based on internal management reports, was
approximately 47 million.
The Company has a 67% ownership interest in and full operational control of Hulu. NBC Universal (NBCU) owns the
remaining 33% of Hulu. The Company has a put/call agreement with NBCU, which provides NBCU the option to require the
Company to purchase NBCU’s interest in Hulu and the Company the option to require NBCU to sell its interest in Hulu to the
Company, in both cases, beginning in January 2024 (see Note 2 of the Consolidated Financial Statements for additional
information).
Content Sales/Licensing and Other
The majority of Content Sales/Licensing revenue is derived from TV/SVOD, theatrical and home entertainment
distribution. In addition, revenue is generated from music distribution and stage plays.
The Company also publishes National Geographic magazine and provides post-production services through Industrial
Light & Magic and Skywalker Sound. These activities are reported with Content Sales/Licensing.
TV/SVOD Distribution
Although we generally intend to use our film and television content on our DTC services and linear networks in TV/
SVOD windows, we also license our content to third-party television networks, television stations and other video service
providers for distribution to viewers on television or a variety of internet-connected devices, including through other DTC
services.
Theatrical Distribution
The Company licenses full-length live-action and animated films from the Company’s Studio production groups to
theaters globally. Cumulatively through October 1, 2022, the Company has released approximately 1,100 full-length live-action
films and 100 full-length animated films. In the domestic and most major international markets, we generally distribute and
market our films directly. In certain international markets our films are distributed by independent companies. During fiscal
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2023, we expect to release approximately 20 films, although we may choose to distribute certain films exclusively on our DTC
streaming services in certain territories.
The Company incurs significant marketing and advertising costs before and throughout the theatrical release of a film in
an effort to generate public awareness of the film, to increase the public’s intent to view the film and to help generate consumer
interest in the subsequent home entertainment and other ancillary markets. These costs are expensed as incurred, which may
result in a loss on a film in the theatrical markets, including in periods prior to the theatrical release of the film.
Home Entertainment Distribution
We distribute the Company’s film and episodic television content in home entertainment markets in physical (DVD and
Blu-ray disc) and electronic formats globally.
Domestically, we distribute directly to retailers and wholesalers. Internationally, we distribute directly and through
independent distribution companies. Physical formats of our film and episodic television content are generally sold to retailers,
such as Walmart and Target, and electronic formats are sold through e-tailers, such as Apple and Amazon, and MVPDs, such as
Comcast and DirecTV. The Company also operates Disney Movie Club, which sells DVD/Blu-ray discs directly to consumers
in the U.S. and Canada.
Distribution of film content in the home entertainment window generally starts within three months after the theatrical
release. Electronic formats may be released up to two weeks ahead of the physical release.
Distribution of episodic television content in the home entertainment window includes digital sales of season passes that
can be purchased prior to, during and after the broadcast season with individual episodes typically available to season pass
customers shortly after the initial airing of the show in each territory. Individual episodes are also available for digital purchase
shortly after their initial airing in each territory.
As of October 1, 2022, we have approximately 2,200 produced and acquired film titles that are actively distributed in the
home entertainment window, including approximately 1,900 live-action titles and approximately 300 animated titles.
Concurrently with physical home entertainment distribution, we license titles to video-on-demand services (such as Apple
and Amazon) for electronic delivery to consumers for a specified rental period.
Disney Theatrical Group
Disney Theatrical Group develops, produces and licenses live entertainment events on Broadway and around the world.
Productions include The Lion King, Frozen, Aladdin and Beauty and the Beast.
Disney Theatrical Group also licenses the Company’s IP to Feld Entertainment, the producer of Disney On Ice and Marvel
Universe Live!.
Music Distribution
The Disney Music Group (DMG) commissions new music for the Company’s motion pictures and television programs
and develops, produces, markets and distributes the Company’s music worldwide either directly or through license agreements.
DMG also licenses the songs and recording copyrights to third parties for printed music, records, audio-visual devices, public
performances and digital distribution and produces live musical concerts. DMG labels include Walt Disney Records and
Hollywood Records.
Equity Investment
The Company has a 30% effective interest in Tata Play Limited, which operates a direct-to-home satellite distribution
platform in India.
Studios
The Studios produce motion pictures under the Walt Disney Pictures, Twentieth Century Studios, Marvel, Lucasfilm,
Pixar and Searchlight Pictures banners. Costs to produce the films are generally capitalized and allocated to the distribution
platform utilizing the content.
Marvel licensed rights to produce and distribute Spider-Man films to Sony Pictures Entertainment (Sony) prior to the
Company’s fiscal 2010 acquisition of Marvel. In general, Sony incurs the costs to produce and distribute Spider-Man films and
the Company licenses the merchandise rights to third parties. The Company pays Sony a licensing fee based on each film’s box
office receipts, subject to specified limits. In general, the Company distributes other Marvel-produced films.
The Studios film library includes content from approximately 100 years of production history, as well as acquired film
libraries and totals approximately 5,100 live-action titles and 400 animation titles. The library includes approximately 50
movies and approximately 30 series that the Studios group produced for initial distribution on our DTC platforms.
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In fiscal 2023, the Studios plan to produce approximately 40 titles, which include films and episodic television programs,
for distribution theatrically and/or on our DTC platforms.
General Entertainment
Content produced by General Entertainment primarily consists of original episodic television programs, network news and
daytime/nighttime content. General Entertainment also acquires episodic television programming rights. Original content is
generally produced by the following Company owned television studios: ABC Signature; 20th Television; Disney Branded
Television; FX Productions; and National Geographic Studios. Original content is also commissioned by General Entertainment
and produced by various other third-party studios. Costs to produce original content are generally capitalized and allocated to
the distribution platform utilizing the content. Program development is carried out in collaboration with writers, producers and
creative teams.
General Entertainments television programming library includes content from approximately 70 years of production
history. Series with four or more seasons include approximately 75 one-hour dramas, 55 half-hour comedies, 5 half-hour nonscripted series, 30 one-hour non-scripted series, 15 half-hour animated series and 10 half-hour live-action series. The library
includes approximately 130 series that the General Entertainment group produced for initial distribution on our DTC platforms.
In fiscal 2023, General Entertainment plans to produce or commission more than 270 original programs, most of which
will include multiple episodes. Productions generally include comedies, dramas, animations, documentaries, specials, made for
TV movies, shorts and network news content. The vast majority of programming will be used on our Linear Networks and/or
our DTC platforms. Programming is also produced for third-parties, many of which have domestic linear distribution rights,
while the Company has SVOD and international distribution rights.
Sports
The Company has various professional and college sports programming rights, which the Sports group uses to produce
content aired on our Linear Networks and distributed on our DTC platforms, including live events, sports news and original
content. In the U.S., rights include college football (including bowl games and the College Football Playoff) and basketball, the
National Basketball Association (NBA), the National Football League (NFL), MLB, US Open Tennis, the Professional Golfers’
Association (PGA) Championship, the Women’s National Basketball Association (WNBA), soccer, Top Rank Boxing, the
Wimbledon Championships, the Masters golf tournament, mixed martial arts and the National Hockey League (NHL).
Internationally, rights include various cricket events (for which the Company has the global distribution rights to certain events)
and soccer (including English Premier League, LaLiga, Bundesliga and multiple UEFA leagues).
International
The International group focuses on the development and production of locally created and relevant entertainment and
sports content to support growth across the Company’s portfolio of streaming services. In addition, this group also oversees
international media operations, including international linear channels, local advertising sales and local content sales and
distribution. International has produced approximately 150 movies and series for initial distribution on the DTC platforms
worldwide.
Competition and Seasonality
The Company’s Linear Networks and DTC streaming services compete for viewers primarily with other television
networks, independent television stations and other media, such as other DTC streaming services and video games. With
respect to the sale of advertising time, we compete with other television networks, independent television stations, MVPDs and
other advertising media such as digital content, newspapers, magazines, radio and billboards. Our television and radio stations
primarily compete for audiences and advertisers in local market areas.
The Company’s Linear Networks compete with other networks for carriage by MVPDs. The Company’s contractual
agreements with MVPDs are renewed or renegotiated from time to time in the ordinary course of business. Consolidation and
other market conditions in the cable, satellite and telecommunication distribution industry and other factors may adversely
affect the Company’s ability to obtain and maintain contractual terms for the distribution of its various programming services
that are as favorable as those currently in place.
The Content Sales/Licensing businesses compete with all forms of entertainment. A significant number of companies
produce and/or distribute theatrical and television content, distribute products in the home entertainment market, provide pay
television and SVOD services, and produce music and live theater.
The operating results of Content Sales/Licensing fluctuate due to the timing and performance of releases in the theatrical,
home entertainment and television markets. Release dates are determined by several factors, including competition and the
timing of vacation and holiday periods.
The Company’s websites and digital products compete with other websites and entertainment products.
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We also compete with other media and entertainment companies, independent production companies and SVOD services
for the acquisition of sports rights, creative and performing talent, story properties, show concepts, scripted and other
programming, advertiser support and exhibition outlets that are essential to the success of our DMED businesses.
Advertising revenues at Linear Networks and Direct-to-Consumer are subject to seasonal advertising patterns, changes in
viewership levels and the demand for sports programming. In general, domestic advertising revenues are typically somewhat
higher during the fall and somewhat lower during the summer months. In addition, advertising revenues generated from sports
programming are impacted by the timing of sports seasons and events, which varies throughout the year or may take place
periodically (e.g. biannually, quadrennially). Affiliate revenues vary with the subscriber trends of MVPDs.
Federal Regulation
Television and radio broadcasting are subject to extensive regulation by the Federal Communications Commission (FCC)
under federal laws and regulations, including the Communications Act of 1934, as amended. Violation of FCC regulations can
result in substantial monetary fines, limited renewals of licenses and, in egregious cases, denial of license renewal or revocation
of a license. FCC regulations that affect DMED include the following:
•
Licensing of television and radio stations. Each of the television and radio stations we own must be licensed by the
FCC. These licenses are granted for periods of up to eight years, and we must obtain renewal of licenses as they expire
in order to continue operating the stations. We (and the acquiring entity in the case of a divestiture) must also obtain
FCC approval whenever we seek to have a license transferred in connection with the acquisition or divestiture of a
station. The FCC may decline to renew or approve the transfer of a license in certain circumstances and may delay
renewals while permitting a licensee to continue operating. Although we have received such renewals and approvals in
the past or have been permitted to continue operations when renewal is delayed, there can be no assurance that this will
be the case in the future.
•
Television and radio station ownership limits. The FCC imposes limitations on the number of television stations and
radio stations we can own in a specific market, on the combined number of television and radio stations we can own in
a single market and on the aggregate percentage of the national audience that can be reached by television stations we
own. Currently:
◦ FCC regulations may restrict our ability to own more than one television station in a market, depending on the size
and nature of the market. We do not own more than one television station in any market.
◦ Federal statutes permit our television stations in the aggregate to reach a maximum of 39% of the national
audience. Pursuant to the most recent decision by the FCC as to how to calculate compliance with this limit, our
eight stations reach approximately 20% of the national audience.
◦ FCC regulations in some cases impose restrictions on our ability to acquire additional radio or television stations in
the markets in which we own radio stations. We do not believe any such limitations are material to our current
operating plans.
•
Dual networks. FCC rules currently prohibit any of the four major broadcast television networks — ABC, CBS, Fox
and NBC — from being under common ownership or control.
•
Regulation of programming. The FCC regulates broadcast programming by, among other things, banning “indecent”
programming, regulating political advertising and imposing commercial time limits during children’s programming.
Penalties for broadcasting indecent programming can be over $400,000 per indecent utterance or image per station.
Federal legislation and FCC rules also limit the amount of commercial matter that may be shown on broadcast or cable
channels during programming designed for children 12 years of age and younger. In addition, broadcast stations are
generally required to provide an average of three hours per week of programming that has as a “significant purpose”
meeting the educational and informational needs of children 16 years of age and younger. FCC rules also give
television station owners the right to reject or refuse network programming in certain circumstances or to substitute
programming that the licensee reasonably believes to be of greater local or national importance.
•
Cable and satellite carriage of broadcast television stations. With respect to MVPDs operating within a television
station’s Designated Market Area, FCC rules require that every three years each television station elect either “must
carry” status, pursuant to which MVPDs generally must carry a local television station in the station’s market, or
“retransmission consent” status, pursuant to which the MVPDs must negotiate with the television station to obtain the
consent of the television station prior to carrying its signal. The ABC owned television stations have historically
elected retransmission consent.
•
Cable and satellite carriage of programming. The Communications Act and FCC rules regulate some aspects of
negotiations between programmers and distributors regarding the carriage of networks by cable and satellite
distribution companies, and some cable and satellite distribution companies have sought regulation of additional
aspects of the carriage of programming on their systems. New legislation, court action or regulation in this area could
have an impact on the Company’s operations.
13
The foregoing is a brief summary of certain provisions of the Communications Act, other legislation and specific FCC
rules and policies. Reference should be made to the Communications Act, other legislation, FCC rules and public notices and
rulings of the FCC for further information concerning the nature and extent of the FCC’s regulatory authority.
FCC laws and regulations are subject to change, and the Company generally cannot predict whether new legislation, court
action or regulations, or a change in the extent of application or enforcement of current laws and regulations, would have an
adverse impact on our operations.
DISNEY PARKS, EXPERIENCES AND PRODUCTS
The operations of DPEP’s significant lines of business are as follows:
• Parks & Experiences:
◦ Theme parks and resorts, which include: Walt Disney World Resort in Florida; Disneyland Resort in California;
Disneyland Paris; Hong Kong Disneyland Resort (48% ownership interest); and Shanghai Disney Resort (43%
ownership interest), all of which are consolidated in our results. Additionally, the Company licenses our IP to a
third party to operate Tokyo Disney Resort.
◦ Disney Cruise Line, Disney Vacation Club, National Geographic Expeditions (73% ownership interest),
Adventures by Disney and Aulani, a Disney Resort & Spa in Hawaii
• Consumer Products:
◦ Licensing of our trade names, characters, visual, literary and other IP to various manufacturers, game developers,
publishers and retailers throughout the world, for use on merchandise, published materials and games
◦ Sale of branded merchandise through online, retail and wholesale businesses, and development and publishing of
books, comic books and magazines (except National Geographic magazine, which is reported in DMED)
The significant revenues of DPEP are as follows:
• Theme park admissions – Sales of tickets for admission to our theme parks and for premium access to certain
attractions (e.g. Genie+ and Lightning Lane)
• Parks & Experiences merchandise, food and beverage – Sales of merchandise, food and beverages at our theme parks
and resorts and cruise ships
• Resorts and vacations – Sales of room nights at hotels, sales of cruise and other vacations and sales and rentals of
vacation club properties
• Merchandise licensing and retail:
◦ Merchandise licensing – Royalties from licensing our IP for use on consumer goods
◦ Retail – Sales of merchandise through internet shopping sites generally branded shopDisney and at The Disney
Store, as well as to wholesalers (including books, comic books and magazines)
• Parks licensing and other – Revenues from sponsorships and co-branding opportunities, real estate rent and sales and
royalties earned on Tokyo Disney Resort revenues
The significant expenses of DPEP are as follows:
• Operating expenses consisting primarily of operating labor, costs of goods sold, infrastructure costs, supplies,
commissions and entertainment offerings. Infrastructure costs include technology support costs, repairs and
maintenance, property taxes, utilities and fuel, retail occupancy costs, insurance and transportation
• Selling, general and administrative costs, including marketing costs
• Depreciation and amortization
Significant capital investments:
• In recent years, the majority of the Company’s capital spend has been at our parks and experiences business, which is
principally for theme park and resort expansion, new attractions, cruise ships, capital improvements and systems
infrastructure. The various investment plans discussed in the “Parks & Experiences” section are based on
management’s current expectations. Actual investment may differ.
Parks & Experiences
Walt Disney World Resort
The Walt Disney World Resort is located approximately 20 miles southwest of Orlando, Florida, on approximately 25,000
acres of land. The resort includes theme parks (the Magic Kingdom, EPCOT, Disney’s Hollywood Studios and Disney’s
Animal Kingdom); hotels; vacation club properties; a retail, dining and entertainment complex (Disney Springs); a sports
14
complex; conference centers; campgrounds; golf courses; water parks; and other recreational facilities designed to attract
visitors for an extended stay.
The Walt Disney World Resort is marketed through a variety of international, national and local advertising and
promotional activities. A number of attractions and restaurants in each of the theme parks are sponsored or operated by other
companies under multi-year agreements.
Magic Kingdom — The Magic Kingdom consists of six themed areas: Adventureland, Fantasyland, Frontierland, Liberty
Square, Main Street USA and Tomorrowland. Each land provides a unique guest experience featuring themed attractions,
restaurants, merchandise shops and entertainment experiences. Tomorrowland is currently undergoing an expansion including
the Tron Lightcycle/Run, which is scheduled to open in Spring 2023.
EPCOT — EPCOT consists of four major themed areas: World Showcase, World Celebration, World Nature and World
Discovery. All areas feature themed attractions, restaurants, merchandise shops and entertainment experiences. Countries
represented with pavilions include Canada, China, France, Germany, Italy, Japan, Mexico, Morocco, Norway, the United
Kingdom and the U.S. EPCOT is undergoing a multi-year transformation, which includes the addition of Guardians of the
Galaxy: Cosmic Rewind, which opened in the summer of 2022 and Journey of Water, inspired by Moana, which is scheduled to
open late 2023.
Disney’s Hollywood Studios — Disney’s Hollywood Studios consists of eight themed areas: Animation Courtyard,
Commissary Lane, Echo Lake, Grand Avenue, Hollywood Boulevard, Star Wars: Galaxy’s Edge, Sunset Boulevard and Toy
Story Land. The areas provide behind-the-scenes glimpses of Hollywood-style action through various shows and attractions and
offer themed food service, merchandise shops and entertainment experiences.
Disney’s Animal Kingdom — Disney’s Animal Kingdom consists of a 145-foot tall Tree of Life centerpiece surrounded
by five themed areas: Africa, Asia, DinoLand USA, Discovery Island and Pandora – The World of Avatar. Each themed area
contains attractions, restaurants, merchandise shops and entertainment experiences. The park features more than 300 species of
live mammals, birds, reptiles and amphibians and 3,000 varieties of vegetation.
Hotels, Vacation Club Properties and Other Resort Facilities — As of October 1, 2022, the Company owned and
operated 19 resort hotels and vacation club facilities at the Walt Disney World Resort, with approximately 23,000 rooms and
3,600 vacation club units. Resort facilities include 500,000 square feet of conference meeting space and Disney’s Fort
Wilderness camping and recreational area, which offers approximately 800 campsites.
Disney Springs is an approximately 120-acre retail, dining and entertainment complex and consists of four areas:
Marketplace, The Landing, Town Center and West Side. The areas are home to more than 150 venues including the 64,000square-foot World of Disney retail store. Most of the Disney Springs facilities are operated by third parties that pay rent to the
Company.
Ten independently-operated hotels with approximately 7,000 rooms are situated on property leased from the Company.
ESPN Wide World of Sports Complex is a 230-acre center that hosts professional caliber training and competitions,
festival and tournament events and interactive sports activities. The complex, which welcomes both amateur and professional
athletes, accommodates multiple sporting events, including baseball, basketball, football, soccer, softball, tennis and track and
field. It also includes a stadium, as well as two venues designed for cheerleading, dance competitions and other indoor sports.
Other recreational amenities and activities available at the Walt Disney World Resort include three championship golf
courses, miniature golf courses, full-service spas, tennis, sailing, swimming, horseback riding and a number of other sports and
leisure time activities. The resort also includes two water parks: Disney’s Blizzard Beach and Disney’s Typhoon Lagoon.
Disneyland Resort
The Company owns 489 acres and has rights under a long-term lease for use of an additional 52 acres of land in Anaheim,
California. The Disneyland Resort includes two theme parks (Disneyland and Disney California Adventure), three resort hotels
and a retail, dining and entertainment complex (Downtown Disney).
The Disneyland Resort is marketed through a variety of international, national and local advertising and promotional
activities. A number of the attractions and restaurants in the theme parks are sponsored or operated by other companies under
multi-year agreements.
Disneyland — Disneyland consists of nine themed areas: Adventureland, Critter Country, Fantasyland, Frontierland, Main
Street USA, Mickey’s Toontown, New Orleans Square, Star Wars: Galaxy’s Edge, and Tomorrowland. These areas feature
themed attractions, restaurants, merchandise shops and entertainment experiences. Mickey’s Toontown is currently undergoing
an expansion and transformation, including the addition of Mickey and Minnie’s Runaway Railway, which is scheduled to open
in early 2023.
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Disney California Adventure — Disney California Adventure is adjacent to Disneyland and includes eight themed areas:
Avengers Campus, Buena Vista Street, Cars Land, Grizzly Peak, Hollywood Land, Pacific Wharf (which will be transformed
into San Fransokyo from Big Hero 6), Paradise Gardens Park and Pixar Pier. These areas include themed attractions,
restaurants, merchandise shops and entertainment experiences.
Hotels, Vacation Club Units and Other Resort Facilities — Disneyland Resort includes three Company owned and
operated hotels and vacation club facilities with approximately 2,400 rooms, 50 vacation club units and 180,000 square feet of
conference meeting space.
Downtown Disney is a themed 15-acre retail, entertainment and dining complex with approximately 30 venues located
adjacent to both Disneyland and Disney California Adventure. Most of the Downtown Disney facilities are operated by third
parties that pay rent to the Company.
Aulani, a Disney Resort & Spa
Aulani, a Disney Resort & Spa, is a Company-operated family resort on a 21-acre oceanfront property on Oahu, Hawaii
featuring approximately 350 hotel rooms, an 18,000-square-foot spa and 12,000 square feet of conference meeting space. The
resort also has approximately 480 vacation club units.
Disneyland Paris
Disneyland Paris is located on approximately 5,200-acres in Marne-la-Vallée, approximately 20 miles east of Paris,
France. The land is being developed pursuant to a master agreement with French governmental authorities. Disneyland Paris
includes two theme parks (Disneyland Park and Walt Disney Studios Park); seven themed resort hotels; two convention centers;
a shopping, dining and entertainment complex (Disney Village); and a 27-hole golf facility. Of the 5,200 acres comprising the
site, approximately half have been developed to date, including a planned community (Val d’Europe) and an eco-tourism
destination (Villages Nature).
Disneyland Park — Disneyland Park consists of five themed areas: Adventureland, Discoveryland, Fantasyland,
Frontierland and Main Street USA. These areas include themed attractions, restaurants, merchandise shops and entertainment
experiences.
Walt Disney Studios Park — Walt Disney Studios Park includes five themed areas: Front Lot, Production Courtyard,
Toon Studio, Worlds of Pixar and Avengers Campus, which opened in the summer of 2022. These areas each include themed
attractions, restaurants, merchandise shops and entertainment experiences. Walt Disney Studios Park is undergoing a multi-year
expansion that will include a new themed area based on Frozen.
Hotels and Other Facilities — Disneyland Paris operates seven resort hotels, with approximately 5,750 rooms and
250,000 square feet of conference meeting space. In addition, five on-site hotels that are owned and operated by third parties
provide approximately 1,500 rooms.
Disney Village is an approximately 500,000-square-foot retail, dining and entertainment complex located between the
theme parks and the hotels. A number of the Disney Village facilities are operated by third parties that pay rent to the Company.
Val d’Europe is a planned community near Disneyland Paris that is being developed in phases. Val d’Europe currently
includes a regional train station, hotels and a town center consisting of a shopping center as well as office, commercial and
residential space. Third parties operate these developments on land leased or purchased from the Company.
Villages Nature is an eco-tourism resort that consists of recreational facilities, restaurants and 900 vacation units. The
resort is a 50% joint venture between the Company and Pierre & Vacances-Center Parcs, which manages the venture.
Hong Kong Disneyland Resort
The Company owns a 48% interest in Hong Kong Disneyland Resort and the Government of the Hong Kong Special
Administrative Region (HKSAR) owns a 52% interest. The resort is located on 310 acres on Lantau Island and is in close
proximity to the Hong Kong International Airport and the Hong Kong-Zhuhai-Macau Bridge. Hong Kong Disneyland Resort
includes one theme park and three themed resort hotels. A separate Hong Kong subsidiary of the Company is responsible for
managing Hong Kong Disneyland Resort. The Company is entitled to receive royalties and management fees based on the
operating performance of Hong Kong Disneyland Resort.
Hong Kong Disneyland — Hong Kong Disneyland consists of seven themed areas: Adventureland, Fantasyland, Grizzly
Gulch, Main Street USA, Mystic Point, Tomorrowland and Toy Story Land. These areas feature themed attractions, restaurants,
merchandise shops and entertainment experiences. The park is in the midst of a multi-year expansion project that includes a
Frozen-themed area, expected to open in 2023.
Hotels — Hong Kong Disneyland Resort includes three themed hotels with a total of 1,750 rooms and approximately
16,000 square feet of conference meeting space.
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Shanghai Disney Resort
The Company owns a 43% interest in Shanghai Disney Resort and Shanghai Shendi (Group) Co., Ltd (Shendi) owns a
57% interest. The resort is located in the Pudong district of Shanghai on approximately 1,000 acres of land, which includes the
Shanghai Disneyland theme park; two themed resort hotels; a retail, dining and entertainment complex (Disneytown); and an
outdoor recreation area. A management company, in which the Company has a 70% interest and Shendi has a 30% interest, is
responsible for operating the resort and receives a management fee based on the operating performance of Shanghai Disney
Resort. The Company is also entitled to royalties based on the resort’s revenues.
Shanghai Disneyland — Shanghai Disneyland consists of seven themed areas: Adventure Isle, Fantasyland, Gardens of
Imagination, Mickey Avenue, Tomorrowland, Toy Story Land and Treasure Cove. These areas feature themed attractions,
shows, restaurants, merchandise shops and entertainment experiences. The Company is constructing an eighth themed area
based on the animated film Zootopia.
Hotels and Other Facilities — Shanghai Disneyland Resort includes two themed hotels with a total of 1,220 rooms.
Disneytown is an 11-acre outdoor complex of dining, shopping and entertainment venues located adjacent to Shanghai
Disneyland. Most Disneytown facilities are operated by third parties that pay rent to Shanghai Disney Resort.
Tokyo Disney Resort
Tokyo Disney Resort is located on 494 acres of land, six miles east of downtown Tokyo, Japan. The Company earns
royalties on revenues generated by the Tokyo Disney Resort, which is owned and operated by Oriental Land Co., Ltd. (OLC), a
third-party Japanese corporation. The resort includes two theme parks (Tokyo Disneyland and Tokyo DisneySea); five Disneybranded hotels; six other hotels (operated by third parties other than OLC); a retail, dining and entertainment complex
(Ikspiari); and Bon Voyage, a Disney-themed merchandise location.
Tokyo Disneyland — Tokyo Disneyland consists of seven themed areas: Adventureland, Critter Country, Fantasyland,
Tomorrowland, Toontown, Westernland and World Bazaar.
Tokyo DisneySea — Tokyo DisneySea is divided into seven “ports of call,” including American Waterfront, Arabian
Coast, Lost River Delta, Mediterranean Harbor, Mermaid Lagoon, Mysterious Island and Port Discovery. OLC is expanding
Tokyo DisneySea to include an eighth themed port, Fantasy Springs expected to open in spring 2024.
Hotels and Other Resort Facilities — Tokyo Disney Resort includes five Disney-branded hotels with a total of more than
3,000 rooms and a monorail, which links the theme parks and resort hotels with Ikspiari. OLC is currently constructing a 475room Disney-branded hotel at Tokyo DisneySea that is expected to open in spring 2024.
Disney Vacation Club (DVC)
DVC offers ownership interests in 15 resort facilities located at the Walt Disney World Resort; Disneyland Resort;
Aulani; Vero Beach, Florida; and Hilton Head Island, South Carolina. Available units are offered for sale under a vacation
ownership plan and are operated as hotel rooms when not occupied by vacation club members. The Company’s vacation club
units range from deluxe studios to three-bedroom grand villas. Unit counts in this document are presented in terms of twobedroom equivalents. DVC had approximately 4,400 vacation club units as of October 1, 2022 and is scheduled to open an
additional 135 units at The Villas at Disneyland Hotel in 2023. The Company also plans to open additional units at Disney’s
Polynesian Village Resort in late 2024.
Storyliving by Disney
The Company is developing its first Storyliving by Disney residential community, Cotino, in Rancho Mirage, California.
Disney Cruise Line
Disney Cruise Line is a five-ship vacation cruise line, which operates out of ports in North America and Europe. The
Disney Magic and the Disney Wonder are 85,000-ton 875-stateroom ships; the Disney Dream and the Disney Fantasy are
130,000-ton 1,250-stateroom ships; and the Disney Wish, launched in July 2022, is a 140,000-ton 1,250-stateroom ship. The
ships cater to families, children, teenagers and adults, with themed areas and activities for each group. Many cruise vacations
include a visit to Disney’s Castaway Cay, a 1,000-acre private Bahamian island.
Disney Cruise Line is adding the Disney Treasure and a seventh ship, which are to be delivered from the shipyard in fiscal
2025 and fiscal 2026, respectively. Both of these ships will be approximately 140,000 tons with 1,250 staterooms and will be
powered by liquefied natural gas.
In November 2022, the Company purchased a partially completed ship for an amount that is not material. The ship will be
approximately 200,000 tons. Disney Cruise Line will incur the cost to complete construction with total costs anticipated to be
less than our recent fleet additions. This ship is expected to be delivered in 2025.
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The Company has approximately 550 acres of land at Lighthouse Point on the island of Eleuthera, which is scheduled to
open as a Disney Cruise Line destination in 2024.
Adventures by Disney and National Geographic Expeditions
Adventures by Disney and National Geographic Expeditions offer guided tour packages predominantly at non-Disney
sites around the world.
Walt Disney Imagineering
Walt Disney Imagineering provides master planning, real estate development, attraction, entertainment and show design,
engineering support, production support, project management and research and development for DPEP.
Consumer Products
Licensing
The Company’s merchandise licensing operations cover a diverse range of product categories, the most significant of
which are: toys, apparel, games, home décor and furnishings, accessories, food, books, health and beauty, stationery, footwear,
magazines and consumer electronics. The Company licenses characters from its film, television and other properties for use on
third-party products in these categories and earns royalties, which are usually based on a fixed percentage of the wholesale or
retail selling price of the products. Some of the major properties licensed by the Company include: Mickey and Friends, Star
Wars, Spider-Man, Disney Princess, Avengers, Frozen, Toy Story, Winnie the Pooh and Cars.
Retail
The Company sells Disney-, Marvel-, Pixar- and Lucasfilm-branded products through shopDisney branded internet sites
and Disney Store branded retail locations. At October 1, 2022, the Company owns and operates approximately 40 stores in
Japan, 20 stores in North America, three stores in Europe and one store in China.
The Company creates, distributes and publishes a variety of products in multiple countries and languages based on the
Company’s branded franchises. The products include children’s books and comic books.
Competition and Seasonality
The Company’s theme parks and resorts as well as Disney Cruise Line and Disney Vacation Club compete with other
forms of entertainment, lodging, tourism and recreational activities. The profitability of the leisure-time industry may be
influenced by various factors that are not directly controllable, such as economic conditions including business cycle and
exchange rate fluctuations, health concerns, the political environment, travel industry trends, amount of available leisure time,
oil and transportation prices, weather patterns and natural disasters. The licensing and retail business competes with other
licensors, retailers and publishers of character, brand and celebrity names, as well as other licensors, publishers and developers
of game software, online video content, websites, other types of home entertainment and retailers of toys and kids merchandise.
All of the theme parks and the associated resort facilities are operated on a year-round basis. Typically, theme park
attendance and resort occupancy fluctuate based on the seasonal nature of vacation travel and leisure activities, the opening of
new guest offerings and pricing and promotional offers. Peak attendance and resort occupancy generally occur during the
summer months when school vacations occur and during early winter and spring holiday periods. The licensing, retail and
wholesale businesses are influenced by seasonal consumer purchasing behavior, which generally results in higher revenues
during the Company’s first and fourth fiscal quarter, and by the timing and performance of theatrical and game releases and
cable programming broadcasts.
INTELLECTUAL PROPERTY PROTECTION
The Company’s businesses throughout the world are affected by its ability to exploit and protect against infringement of
its IP, including trademarks, trade names, copyrights, patents and trade secrets. Important IP includes rights in the content of
motion pictures, television programs, electronic games, sound recordings, character likenesses, theme park attractions, books
and magazines, and merchandise. Risks related to the protection and exploitation of IP rights and information concerning the
expiration of certain of our copyrights are set forth in Item 1A – Risk Factors.
AVAILABLE INFORMATION
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports are available without charge on our website, www.disney.com/investors, as soon as reasonably practicable after they are
filed electronically with the U.S. Securities and Exchange Commission (SEC). We are providing the address to our internet site
solely for the information of investors. We do not intend the address to be an active link or to otherwise incorporate the contents
of the website into this report.
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ITEM 1A. Risk Factors
For an enterprise as large and complex as the Company, a wide range of factors could materially affect future
developments and performance. In addition to the factors affecting specific business operations identified in connection with the
description of these operations and the financial results of these operations elsewhere in our filings with the SEC, the most
significant factors affecting our business include the following:
BUSINESS, ECONOMIC, MARKET and OPERATING CONDITION RISKS
The adverse impact of COVID-19 on our businesses will continue for an unknown length of time and may continue to
impact certain of our key sources of revenue.
Since early 2020, the world has been and continues to be impacted by COVID-19 and its variants. COVID-19 and
measures to prevent its spread have impacted our segments in a number of ways, most significantly at DPEP where our theme
parks and resorts were closed and cruise ship sailings and guided tours were suspended. In addition, at DMED we delayed, or in
some cases, shortened or canceled theatrical releases and experienced disruptions in the production and availability of content.
Collectively, our impacted businesses have historically been the source of the majority of our revenue. Operations have
resumed at various points since May 2020, with certain theme parks and resort operations and film and television productions
resuming by the end of fiscal 2020 and throughout 2021. Although operations resumed, many of our businesses continue to
experience impacts from COVID-19, such as incremental health and safety measures and related increased expenses, capacity
restrictions and closures (including at some of our international parks and in theaters in certain markets), and disruptions of
content production activities.
COVID-19 impacts and future health outbreaks and pandemics could hasten the erosion of historical sources of revenue at
our Linear Networks businesses and change consumer preferences. For example, COVID-19 impacts have changed, and may
continue to change, consumer behavior and consumption patterns, such as theater-going to watch movies. Some industries in
which our customers operate, such as theatrical distribution, retail and travel, have experienced, and could continue to
experience, contraction and financial distress, which could impact the profitability of our businesses going forward.
Our mitigation efforts in response to the impacts of COVID-19 on our businesses have had, or may continue to have,
negative impacts. For example, in response to COVID-19 impacts, we incurred significant additional indebtedness and delayed
or suspended certain projects in which we have invested, particularly at our parks and resorts and studio operations. In addition,
we may take mitigation actions in the future to respond to the impacts of COVID-19 or other health outbreaks or pandemics on
our businesses, such as raising additional financing; not declaring future dividends; further suspending or reducing capital
spending; reducing film and television content investments; implementing furloughs or reductions in force or modifying our
operating strategy. These and other of our mitigating actions may have an adverse impact on our businesses. Additionally, there
are limitations on our ability to mitigate the adverse financial impact of COVID-19 and other health outbreaks or pandemics,
including the fixed costs of our theme park business and the impact such events may have on capital markets and our cost of
borrowing.
Geographic variation in government requirements and ongoing changes to restrictions have disrupted and could further
disrupt our businesses, including our production operations. Our operations could be suspended, re-suspended or subjected to
new or reinstated limitations by government action or otherwise in the future as a result of developments related to COVID-19,
such as the expansion of the Omicron subvariants or other variants, and other future health outbreaks and pandemics. For
example, our international parks have reopened and closed multiple times since the onset of COVID-19. Some of our
employees who returned to work were later refurloughed. Our operations could be further negatively impacted and our
reputation could be negatively impacted by a significant COVID-19 or other health outbreak impacting our employees,
customers or others interacting with our businesses, including our supply chain.
The impacts of COVID-19 to our business have generally amplified, or reduced our ability to mitigate, the other risks
discussed in our filings with the SEC and our remediation efforts may not be successful.
COVID-19 also makes it more challenging for management to estimate future performance of our businesses. COVID-19
has already adversely impacted our businesses and net cash flow, and we expect the ultimate magnitude of these disruptions on
our financial and operational results will be dictated by the length of time that such disruptions continue which will, in turn,
depend on the currently unknowable duration and severity of the impacts of COVID-19, and among other things, the impact
and duration of governmental actions imposed in response to COVID-19 and individuals’ and companies’ risk tolerance
regarding health matters going forward.
Changes in U.S., global, and regional economic conditions are expected to have an adverse effect on the profitability of
our businesses.
A decline in economic conditions, such as recession, economic downturn, and/or inflationary conditions in the U.S. and
other regions of the world in which we do business can adversely affect demand and/or expenses for any of our businesses, thus
reducing our revenue and earnings. Past declines in economic conditions reduced spending at our parks and resorts, purchases
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of and prices for advertising on our broadcast and cable networks and owned stations, performance of our home entertainment
releases, and purchases of Company-branded consumer products, and similar impacts can be expected as such conditions recur.
The current decline in economic conditions could also reduce attendance at our parks and resorts, prices that MVPDs pay for
our cable programming, purchases of and prices for advertising on our DTC products or subscription levels for our cable
programming or DTC products, while also increasing the prices we pay for goods, services and labor. Economic conditions can
also impair the ability of those with whom we do business to satisfy their obligations to us. In addition, an increase in price
levels generally, or in price levels in a particular sector such as current inflation in the domestic and global energy sector and
other pronounced price increases generally and in certain other sectors, could result in a shift in consumer demand away from
the entertainment and consumer products we offer, which could also adversely affect our revenues and, at the same time,
increase our costs. A decline in economic conditions could impact implementation of our business plans, such as our plans to
realign our cost structure and for the new DTC ad-supported service, pricing structure and price increases. In addition, actions
to reduce inflation, including raising interest rates, increase our cost of borrowing, which in turn could make it more difficult to
obtain financing for our operations or investments on favorable terms. Further, global economic conditions may impact foreign
currency exchange rates against the U.S. dollar. The current or continued strength in the value of the U.S. dollar has adversely
impacted the U.S. dollar value of revenue we receive and expect to receive from other markets and may reduce international
demand for our products and services. A decrease in the value of the U.S. dollar may increase our labor, supply or other costs in
non-U.S. markets. Although we hedge exposure to certain foreign currency fluctuations, any such hedging activity may not
substantially offset the negative financial impact of exchange rate fluctuations and is not expected to offset all such negative
financial impact, particularly in periods of sustained U.S. dollar strength relative to multiple foreign currencies. Further,
economic or political conditions in countries outside the U.S. also have reduced, and could continue to reduce, our ability to
hedge exposure to currency fluctuations in those countries or our ability to repatriate revenue from those countries. Broader
supply chain delays, such as those currently impacting global distribution may further exacerbate current inflationary pressures
and impact our ability to sell and deliver goods or otherwise disrupt our operations. The adverse impact on our businesses of the
decline in economic conditions will depend, in part, on its severity and duration and our ability to mitigate the impacts of this
decline on our businesses will be limited.
Changes in technology and in consumer consumption patterns may affect demand for our entertainment products, the
revenue we can generate from these products or the cost of producing or distributing products.
The media entertainment and internet businesses in which we participate increasingly depend on our ability to
successfully adapt to shifting patterns of content consumption through the adoption and exploitation of new technologies. New
technologies affect the demand for our products, the manner in which our products are distributed to consumers, ways we
charge for and receive revenue for our entertainment products and the stability of those revenue streams, the sources and nature
of competing content offerings, the time and manner in which consumers acquire and view some of our entertainment products
and the options available to advertisers for reaching their desired audiences. This trend has impacted the business model for
certain traditional forms of distribution, as evidenced by the industry-wide decline in ratings for broadcast television, the
reduction in demand for home entertainment sales of theatrical content, the development of alternative distribution channels for
broadcast and cable programming and declines in subscriber levels for traditional cable channels, including for a number of our
networks. In addition, theater-going to watch movies currently is, and may continue to be, below pre-COVID-19 levels.
Declines in linear viewership have resulted in decreased advertising revenue. In order to respond to these developments, we
regularly consider, and from time to time implement changes to our business models, most recently by developing, investing in
and acquiring DTC products, initiating plans to again reorganize our media and entertainment businesses to advance our DTC
strategies, and developing next generation storytelling offerings. There can be no assurance that our DTC offerings, next
generation storytelling offerings and other efforts will successfully respond to these changes. In addition, declines in certain
traditional forms of distribution may increase the cost of content allocable to our DTC offerings, negatively impacting the
profitability of our DTC offerings. We expect to forgo revenue from traditional sources, particularly as we expand our DTC
offerings. To date we have experienced significant losses in our DTC businesses. There can be no assurance that the DTC
model and other business models we may develop will ultimately be profitable or as profitable as our existing or historic
business models.
Misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products could
negatively impact demand for our entertainment offerings and products and adversely affect the profitability of any of
our businesses.
Our businesses create entertainment, travel and consumer products whose success depends substantially on consumer
tastes and preferences that change in often unpredictable ways. The success of our businesses depends on our ability to
consistently create compelling content, which may be distributed, among other ways, through broadcast, cable, internet or
cellular technology, theme park attractions, hotels and other resort facilities and travel experiences and consumer products.
Such distribution must meet the changing preferences of the broad consumer market and respond to competition from an
expanding array of choices facilitated by technological developments in the delivery of content. The success of our theme
parks, resorts, cruise ships and experiences, as well as our theatrical releases, depends on demand for public or out-of-home
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entertainment experiences. Demand for certain of our out-of-home entertainment experiences, such as theater-going to watch
movies, has not returned to pre-pandemic levels, and COVID-19 may continue to impact consumer tastes and preferences. In
addition, many of our businesses increasingly depend on acceptance of our offerings and products by consumers outside the
U.S. The success of our businesses therefore depends on our ability to successfully predict and adapt to changing consumer
tastes and preferences outside as well as inside the U.S. Moreover, we must often invest substantial amounts in content
production and acquisition, acquisition of sports rights, theme park attractions, cruise ships or hotels and other facilities or
customer facing platforms before we know the extent to which these products will earn consumer acceptance, and these
products may be introduced into a significantly different market or economic or social climate from the one we anticipated at
the time of the investment decisions. If our entertainment offerings and products (including our content offerings, which have
been impacted by COVID-19 and may in the future be impacted by COVID-19 developments or other health outbreaks or
pandemics) as well as our methods to make our offerings and products available to consumers, do not achieve sufficient
consumer acceptance, our revenue may decline, decline further or fail to grow to the extent we anticipate when making
investment decisions and thereby further adversely affect the profitability of one or more of our businesses. Further, consumers’
perceptions of our position on matters of public interest, including our efforts to achieve certain of our environmental and social
goals, often differ widely and present risks to our reputation and brands. Consumer tastes and preferences impact, among other
items, revenue from advertising sales (which are based in part on ratings for the programs in which advertisements air), affiliate
fees, subscription fees, theatrical film receipts, the license of rights to other distributors, theme park admissions, hotel room
charges and merchandise, food and beverage sales, sales of licensed consumer products or sales of our other consumer products
and services.
The success of our businesses is highly dependent on the existence and maintenance of intellectual property rights in the
entertainment products and services we create.
The value to us of our IP is dependent on the scope and duration of our rights as defined by applicable laws in the U.S.
and abroad and the manner in which those laws are construed. If those laws are drafted or interpreted in ways that limit the
extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from our IP may decrease, or the
cost of obtaining and maintaining rights may increase. The terms of some copyrights for IP related to some of our products and
services have expired and other copyrights will expire in the future. For example, in the United States and countries that look to
the United States copyright term when shorter than their own, the copyright term for early works such as the short film
Steamboat Willie (1928), and the specific early versions of characters depicted in those works, expires at the end of the 95th
calendar year after the date the copyright was originally secured in the United States. Revenues generated from this intellectual
property could be negatively impacted.
The unauthorized use of our IP may increase the cost of protecting rights in our IP or reduce our revenues. The
convergence of computing, communication and entertainment devices, increased broadband internet speed and penetration,
increased availability and speed of mobile data transmission and increasingly sophisticated attempts to obtain unauthorized
access to data systems have made the unauthorized digital copying and distribution of our films, television productions and
other creative works easier and faster and protection and enforcement of IP rights more challenging. The unauthorized
distribution and access to entertainment content generally continues to be a significant challenge for IP rights holders.
Inadequate laws or weak enforcement mech…